A Comparison of Secured and Unsecured Credit Cards in India

Credit cards have become a common way to handle payments in India. People use them to shop online, pay bills, and even earn rewards. But not all credit cards are the same. One important thing to understand before applying for a card is the comparison of secured and unsecured credit cards. Both types of cards are useful, but they work in different ways. Let’s look at what makes them different and how to choose the right one for you.

What Are Secured Credit Cards?

A secured credit card is a type of card that you can get by keeping a fixed deposit with the bank. The deposit acts as security for the bank. If you keep ₹20,000 as a fixed deposit, the bank may give you a credit card with a limit of around ₹16,000 to ₹18,000. This depends on the bank’s policy.

These cards are mainly for people who do not have a credit score or have a low credit score. Since the bank already has your money as security, they are more willing to give you the card. This makes secured credit cards easier to get, even if you are just starting your credit journey.

What Are Unsecured Credit Cards?

Unsecured credit cards are the most common cards used by people in India. You don’t need to keep any money as a deposit. Banks give you a card based on your income, job type, and credit history.

To get an unsecured card, you usually need to have a good credit score and stable income. These cards often come with features like cashback, reward points, and special discounts on shopping, travel, and dining. But if you miss payments or use more than your limit, you may face high charges.

Comparison of Secured and Unsecured Credit Cards

Let’s now look at a clear comparison of secured and unsecured credit cards in simple words. In a secured credit card, you must give a fixed deposit. This deposit is used to decide your credit limit. If you fail to pay your bills, the bank can take the money from your deposit. These cards are useful for students, first-time users, and people with low credit scores.

On the other hand, unsecured credit cards do not require any deposit. The bank checks your credit score, income, and past payment record before giving you the card. These cards usually offer more benefits like rewards and higher credit limits.

One more point in the comparison of secured and unsecured credit cards is that secured cards are easier to get. You don’t need a high income or strong credit score. But they usually don’t come with extra features. Unsecured cards can give more value, but they are harder to get if your credit score is low.

Why Choose a Secured Credit Card?

There are many good reasons to start with a secured credit card. First, it is easier to get one even if you have never used a credit card before. Second, it helps you build your credit score over time if you pay on time. Third, it lowers the risk of spending too much since your credit limit depends on your fixed deposit.

The comparison of secured and unsecured credit cards shows that secured cards are simple and good for beginners. They may not have many rewards, but they help you start your credit journey.

Why Choose an Unsecured Credit Card?

If you already have a good credit score and regular income, an unsecured credit card is a better option. You don’t need to keep any money with the bank. These cards come with many benefits such as cashback, reward points, discounts, and free access to airport lounges.

The comparison of secured and unsecured credit cards also shows that unsecured cards are more flexible. You can get higher limits and more features. But you should be careful with spending and always pay bills on time.

Can You Upgrade from a Secured to an Unsecured Card?

Yes, it is possible. If you use your secured card wisely and build a good credit score, many banks allow you to upgrade to an unsecured credit card later. This is one of the key points in the comparison of secured and unsecured credit cards. It means that a secured card can be your first step, and later you can switch to an unsecured one with more features.

Important Points to Remember

While going through the comparison of secured and unsecured credit cards, keep these things in mind:

• Always pay your card bills before the due date
• Don’t use more than 30-40% of your credit limit
• Check the interest rates and charges before applying
• Don’t apply for too many cards at the same time

Both secured and unsecured cards are useful if you use them properly. They can help you manage your spending and build your credit score.

Also Read:- The Best Credit Cards for Online Shopping and E-Commerce in India

Final Words

The comparison of secured and unsecured credit cards shows that both types have their own uses. A secured card is a good way to start if you don’t have a credit history or want to improve your score. An unsecured card is better if you already have a good record and want more features.

Choose the one that suits your current situation. Always use your credit card carefully and pay bills on time. This way, you can enjoy the benefits of credit cards without falling into debt. With this simple comparison of secured and unsecured credit cards, we hope you now have a clear idea of what they are and how they work.